Mortgage Broker

28 | fall 2016 cmba-achc.ca CMB MAGAZINE Tribunal ruling gives broker an opportunity to be heard BY OWAIS AHMED POWER THE LIMITS OF S imilar to her counterparts in other provinces, British Columbia's Registrar of Mortgage Brokers has significant investigatory and enforcement powers (most of which will be familiar to readers of this magazine) under the Mortgage Brokers Act. As part of these powers, she can compel mortgage brokers to attend an interview at her office, require that mortgage brokers turn over relevant information and documents, and can perform a search of a mortgage broker's place of business without advance warning or a court order. On the enforcement side, the Registrar, aer giving a mortgage broker an opportunity to respond to the allegations made against him or her (typically at a hearing), can: n suspend or cancel the mortgage broker's registration; and n order that the person pay an administrative penalty of up to $50,000. Fewer readers will be aware that the Registrar also has the power to suspend a mortgage broker's resignation or order the broker to cease a specific activity without holding a hearing, if she considers the length of time necessary to hold one "prejudicial to the public interest." While that power is extraordinary, it makes sense for the Registrar to have it. Where there is a risk of imminent harm to the public, the Registrar must have the ability to act quickly in order to minimize or prevent the risk. e more complicated issue is what should happen aer the Registrar has made the urgent order. Can the Registrar make a final order in urgent circumstances, or only an interim order fashioned to protect the public until there is enough time for a hearing to be held (at which time the mortgage broker can respond to the allegations)? is question was recently considered by the Financial Services Tribunal in the matter of Gordon Stephen Lemon v. Registrar of Mortgage Brokers. 1 In Mr. Lemon's appeal to the Tribunal, the Registrar took the position that although she had made an order against Mr. Lemon in urgent circumstances and without holding a hearing, her order was final in nature; thus, Mr. Lemon was not entitled to dispute the findings made against him in the order. According to the Registrar, Mr. Lemon was only entitled to a hearing on penalty, and he could not make submissions on whether he had engaged in conduct contrary to the Mortgage Brokers Act. e Registrar also took the position that Mr. Lemon should have appealed the order made against him to the Tribunal within the 30-day deadline if he did not agree with the findings. e issue was of substantial importance to Mr. Lemon, as the findings the Registrar had made against him in the order – again, made in Mr. Lemon's absence and without giving him an opportunity to respond – were serious, and included an assertion that he had misappropriated funds from a mortgage investment corporation. Mr. Lemon vigorously disagreed with the findings and asked the Tribunal to confirm that he was entitled to answer the allegations made against him at a hearing before the Registrar. In an important decision for the profession (at least in this writer's view), the Tribunal agreed with Mr. Lemon and found as follows: n in making the order against Mr. Lemon, the Registrar did not dra the order "to be the last word as to the facts and penalty"; n although Mr. Lemon did not appeal the order within the 30-day deadline to the Tribunal, he was still entitled to invoke his opportunity to be heard; and n most importantly, the Tribunal found that, as a matter of law and fairness, when the Registrar makes an order in urgent circumstances without first giving the mortgage broker an opportunity to be heard as to the facts, the Registrar must, before making a final order, give the person an opportunity to be heard on both the facts and penalty. e key takeaway from the Tribunal's decision is that while, in urgent circumstances, the Registrar can make orders without holding a hearing, such an order can only be interim in nature, and before making any final findings on fact or penalty, the mortgage broker must have the opportunity to respond to the allegations made against him or her. Owais Ahmed is a lawyer at Harper Grey LLP in Vancouver, and regularly represents clients subject to investigations and enforcement proceedings by the Registrar of Mortgage Brokers, the Real Estate Council of BC and the BC Securities Commission. 1. The author of this article represented Mr. Lemon on his appeal to the Tribunal The Registrar of Mortgage Brokers has the power to suspend a mortgage broker's resignation or order the broker to cease a specific activity without holding a hearing, if she considers the length of time necessary to hold one "prejudicial to the public interest"

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